State spending duel: Both sides are right

SPRINGFIELD -- Is the state of Illinois going to spend more money in the fiscal year that begins July 1?

CHRIS WETTERICH

SPRINGFIELD -- Is the state of Illinois going to spend more money in the fiscal year that begins July 1?

That was the subject of a rhetorical skirmish last week between Democratic Gov. Pat Quinn and Republicans over the governor’s fiscal 2013 budget proposal.

The Republicans accused Quinn of using fuzzy math and leaving out items to make it look like his budget proposal is frugal. Quinn responds that the spending he and the General Assembly actually control will be reduced if the legislature adopts his plan.

In short, both are right. Here are the arguments of both camps:

Question: How much does the governor propose that the state spend next year compared to this year?

Answer: Quinn’s budget calls for spending $33.78 billion out of the general revenue fund. During the current fiscal year (2012, which runs from July 1, 2011, through June 30, 2012), the governor’s budget office says the state’s adopted budget is $33.73 billion. So, total spending in the state’s general revenue fund would go up by $50 million, a fact acknowledged by Quinn budget director David Vaught at a budget briefing for reporters last week.

But House Minority Leader Tom Cross, R-Oswego, views the increase as being 10 times larger.

“This is a budget, as you see from the charts … that shows that we’re spending over $500 million more than we did last year, so that’s hardly cutting,” Cross said after Quinn’s budget speech.

Q: Where do Cross and the other Republicans in the legislature get that $500 million figure?

A: Last year, the General Assembly adopted a budget that spends $33.2 billion. But Quinn’s budget office has acknowledged that the budget is unbalanced and that the state will actually spend $33.7 billion in the current fiscal year.

Q: How can that happen? I thought state government could spend only as much as the legislature says it can?

A: It’s unclear. The House Republicans believe the extra spending stems from the governor trying to repay $626 million the state’s general fund previously borrowed from other state funds. They maintain that all spending needs to be under the $33.2 billion in appropriations.

The governor’s office maintains repayment of the transfers is required by law, even if the legislature did not specifically appropriate the money, according to Kelly Kraft, the governor's budget spokeswoman. Under the law, the state has 18 months to pay back the other state funds.

“This is stuff they authorized,” Kraft said.

Q: So what figures does Quinn use to argue he’s spending less?

A: The governor is counting only appropriations for state agencies, boards and commissions, the legislature, the judicial system and other state entities. In this respect, he is correct. Spending in those areas has gone from $25.85 billion in fiscal 2011 to $25.25 billion this year to a proposed $24.83 billion next year.

The biggest item those numbers do not include is pension payments, which will total $5.1 billion next year. They continue to climb under a state law passed by the Republican-controlled legislature in 1995.

Other major areas not counted are:

--$2.1 billion in transfers from the general revenue fund to other state funds.

-- $1.6 billion in debt service on bonds previously sold so the state could make pension payments without spending general revenue funds.

“These are important historical numbers. The Civic Federation gave us credit the other day in its report for having reduced discretionary spending,” Vaught told reporters in a Tuesday briefing before Quinn’s budget address. “That’s all the education spending in our state. That’s all the agencies under the governor. That’s the legislative branch. That’s the judicial branch. That’s everything the governor and the General Assembly can appropriate and change every year.”

Republicans say pension payments should be counted to get a true picture of state spending because such payments have varied in the past. In the past decade, the Democrat-controlled legislature and former Gov. Rod Blagojevich took a two-year pension “holiday” — in other words, they skipped the payments. Both Quinn and Blagojevich borrowed money in order to make the required statutory payments.

Asked to respond to the Republican arguments, Quinn’s chief of staff, Jack Lavin, said: “I think we’re rehashing old arguments. We did borrow money, but a pension is an obligation of the state, whether you borrow money to pay for it or whether you pay for it (using general revenue funds). It’s a debt of the state.”

Q: So if the Republicans don’t like the state spending $33.78 billion, how much do they think ought to be spent?

A: Cross declined to give a number. His legislative counterpart, Senate Minority Leader Christine Radogno of Lemont, said the amount should be low enough to start to make a dent in the state’s $8 billion-plus worth of backed-up bills.

“We were in the neighborhood of $30 (billion),” Radogno said, referring to Republican ideas from last year. “If you get in the neighborhood of $31 (billion), that begins to pay down those bills.”

There has been disagreement among Republicans in the House and the Senate on the budget. House Republicans largely supported a budget that they and the House Democrats took the lead in crafting last year. The Senate Republicans thought that budget was too high — something Cross seemed to acknowledge on Wednesday — so Senate Democrats passed the House version on their own.

“We’re going to start a discussion on what that number should be,” Cross said. “Hopefully the four caucuses can come together on a number. We may or may not. We may have some disagreement.”

Chris Wetterich can be reached at (217) 788-1523.

The state budget

Day-to-day state operations are only part of what Illinois government pays for on a daily basis. This chart compares the cost of paying for education, health care, public safety and other public services with pensions and total state general fund spending going back to fiscal 2009. These numbers are for the state’s general fund, which is basically the state’s checkbook. Revenues from the income tax, sales tax and other smaller taxes come into the fund and are spent on state services. All numbers are in billions and rounded.

Fiscal year, state operations, pension payments, total GRF spending

2009, $27.8, $2.5, $32.96

2010, $26.35, $0*, $28.7

2011, $25.85, $3.7, $33.98

2012**, $25.25, $4.13, $33.73

2013***, $24.83, $5.1, $33.78

*The state borrowed money to make its pension payment in fiscal year 2010, so while the pension payment was made, it was not made out of the general fund.